Low-cost airline Ryanair saw its profits fall 47%, despite swelling passenger numbers, and warned it could make a loss in the second half as consumers tightened their belts. This is great news for the many disgruntled passengers who’ve been shafted by them and who now use reputable airlines.
Chief executive Michael O’Leary, delivering the airline’s half year results for the six months to the end of September, said his firm’s adjusted profit after tax had fallen 47% against a background of ‘record oil prices’.
As a result, half year profit came in at €214.6 million, compared to €407.6 million in the first half of 2007, while basic earnings per share fell 46% to 14.44 Euro cents.
Profits were impacted by the record rise in oil seen during 2008, when Brent crude peaked at $147 a barrel, and O’Leary noted fuel costs were up 101% to €788.5 million.
Putting the rise in fuel costs aside, Ryanair grew passenger numbers by 19% to 32 million, while reducing fares by 4% to an average of €47. It also grew revenues by 16% to €1.8 billion.
O’Leary said that achieving the profit that it did was ‘testimony to the strength of the Ryanair lowest fare model.’
Looking ahead, O’Leary reiterated that the recession would continue to drive down oil prices and fares this winter, but he remained upbeat that the group’s traffic would grow by 9% this winter, and by 14% in the full year, with the company servicing 58 million passengers.
However, he also warned that the group believed ‘average fares in the second half will fall by between 15%-20%, leading to losses in the 3rd and 4th quarters.’